Foreign direct investments (FDI) registered US$491 million net inflows in October 2018, 74.2 percent lower than the US$1.9 billion net inflows recorded in the same month in 2017.1,2 Net investments of equity capital reached US$98 million, lower than the year-ago level of US$1.5 billion due to the big ticket investments in October 2017. On a gross basis, placements of equity capital reached US$112 million, which mostly emanated from the Netherlands, the United States, Germany, Japan, and Hong Kong. These investments were channeled mainly to 1) manufacturing, 2) real estate, 3) financial and insurance, 4) electricity, gas, steam and air-conditioning supply, 5) and wholesale and retail trade activities. Investments in debt instruments (consisting mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) amounted to US$331 million from US$318 million in the same period in 2017. Reinvestment of earnings increased by 8.6 percent to US$62 million in October 2018.
On a year-to-date basis, FDI net inflows for the first ten months of 2018 reached US$8.5 billion, an increase of 1.8 percent from the US$8.4 billion net inflows in the comparable period in 2017. Net investments in debt instruments grew by 18.6 percent to reach US$5.9 billion. Reinvestment of earnings expanded by 2.3 percent to US$677 million during the period. Meanwhile, net investments of equity capital declined to US$2 billion from US$2.8 billion in January-October 2017. Equity capital placements during the period were sourced largely from Singapore, Hong Kong, the United States, Japan, and China. These were infused largely to 1) manufacturing, 2) financial and insurance, 3) real estate, 4) arts, entertainment and recreation, 5) and electricity, gas, steam and air-conditioning supply activities.
1 Based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) which uses the asset and liability principle in the compilation of FDI statistics. Under the asset and liability principle, claims of non-resident direct investment enterprises from resident direct investors are presented as reverse investment under net incurrence of liabilities/non-residents' investments in the Philippines (previously presented in the Balance of Payments Manual, 5th edition (BPM5) as negative entry under assets/residents' investments abroad). Conversely, claims of resident direct investment enterprises from foreign direct investors are presented as reverse investment under net acquisition of financial assets/residents' investments abroad (previously presented as negative entry under liabilities/non-residents' investments in the Philippines).
2 BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates. In contrast to investment data from other government sources, the BSP's FDI data include investments where ownership by the foreign enterprise is at least 10 percent. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company. Furthermore, the BSP's FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the IPAs' FDI do not account for equity withdrawals.
Source: Bangko Sentral ng Pilipinas (BSP)